AMC Entertainment shares soared 70% after-hours Friday after a judge rejected a proposed court settlement that would have cleared the way for the movie-theater giant to complete a set of equity transactions enabling it to issue substantially more shares, the Wall Street Journal reported. Delaware Chancery Court Vice Chancellor Morgan Zurn said that she couldn’t approve the settlement as presented. AMC’s proposed transactions would involve a conversion of its preferred equity units, known as Apes, into common shares, as well as a 10-for-1 reverse stock split. AMC has said the transactions would let it raise money by selling additional shares, and that it might need the liquidity buffer to avoid bankruptcy as it struggles with a heavy debt load amid uncertain cinema industry conditions. However, many meme investors who own AMC’s common shares oppose the transactions out of concerns that their shares could be diluted. Certain shareholders sued AMC to prevent the transactions from being consummated, though they later reached a settlement with the company that would provide an extra common share for every 7.5 shares owned. But other investors opposed both the transactions and the settlement, and the Delaware Chancery Court received more than 2,800 objections to it in advance of a two-day trial that took place last month.
